The load down on Trump, the market will remain stuck with the guy - Nordea

Analysts at Nordea Research argued that Trump seems to be winning the trade war from an equity market point-of-view. At the same time the implied probability of Trump leaving office prematurely has plummeted.

Key Quotes:

"Yet many keep saying that “Trump will never..”, but we think he means business."

"The market has been awash with trade war fears, and these worries appear to have been picking up recently, as evidenced by commentary from multinational companies as well as from ECB and Fed officials (e.g. Bullard, Bostic). The trade war noise is, however, becoming a negative risk for global macro as it is easy for companies to delay investment plans when uncertainty picks up. This is something that could expedite our grinding slowdown scenario and, if worse comes to worse, lead to a more pronounced recession risk."

"Alas, these trade fears have yet to affect his popularity, which has been on a rising trend. Indeed, on a recent Gallup poll, he had the highest approval rate since his inauguration. Maybe the market is still underestimating him, as it has had a tendency to do for some years. For instance, Donald Trump spoke about slapping 25% tariffs on China already in early 2011, and here we are. He does seem to mean business."

"And while many expect that the eventual Mueller report (“Russiagate”) to doom the White House any day now, that has been a losing proposition so far. The likelihood that President Trump will be forced out of the White House prematurely has actually been plummeting. It does seem as if the market will remain stuck with the guy."